Multiple Choice
Which statement explains why free markets fail to produce public goods?
A) Firms do not want to produce the goods because they fear competition will drive the price down below costs.
B) Consumers do not want to buy the goods because the price is higher than the value of benefits they would receive.
C) Firms do not want to produce the goods because they believe external costs will eat up their profits.
D) Consumers do not want to buy the products because each one hopes that someone else will buy it and then all consumers will be able to have the product at no personal cost.
Correct Answer:
Verified
Correct Answer:
Verified
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